Future of farming exports looks grim as US trade drops

The Trump factor does not bode well for the country's agricultural exports. Photo / AP

United States President Donald Trump's more restrictive and protectionist approach to trade does ''not bode positively'' for New Zealand's agricultural exporters.

Prof William Bailey, from Western Illinois University, has outlined his thoughts on the ''Trump factor'' in a report for ASB.

Prof Bailey is a former chief economist for the US senate committee on agriculture, nutrition and forestry, and deputy under-secretary of agriculture, and was also chair of agribusiness at Massey University for 13 years.

The potential impact on New Zealand agricultural exports under a Trump presidency was difficult to predict but it would have an impact on trade prospects in a variety of ways, both good and bad, he said.

Agriculture was not a central issue in the election, with one report commenting it was one of the least discussed issues during the presidential race.

President Trump received strong backing from the farm sector with one poll reporting nearly 75% of farmers supported him.

He had also stated his administration would be pro-agriculture.

Based on his limited public comments on agriculture, not a lot of change was expected in the current policy, Prof Bailey said.

It was expected the Trump Administration would relax a number of environmental rules that limited production choices for farmers.

Restrictive immigration policies would hurt US agriculture. President Trump's view of immigration reform would place significant strain on a part of the sector which depended heavily on seasonal or temporary farm labour.

While a majority of farm labourers were involved in fruit and vegetable production, a significant number were involved in dairy production.

While robotic dairy production was slowly increasing in the US, a reduction in the number of farm labourers would directly, and significantly, harm US dairy production.

Trade policy would provide the most dramatic impact on agriculture, including the removal of US from the TPP.

It was difficult to over-emphasise the importance of trade to US agriculture which had enjoyed a positive trade balance in agriculture each year since 1959.

Exports were a key component of a profitable US agriculture sector. US agricultural exports totalled $133billion in 2015.

The top markets for US agricultural products were China, Canada, Mexico and the EU.

US dairy exports had grown from less than 8% of milk production to almost 20% over the past seven years, with Mexico the leading destination.

The US was also an important import market for a number of agricultural products, including several key products from New Zealand.

Potentially, US exports could displace New Zealand exports in some markets as New Zealand exports replaced tariff-affected or banned US products in other markets.

The world's reaction to the imposition of country specific tariffs could broaden to include trade restrictions involving a variety of products and countries not initially targeted.

In that case, New Zealand exporters could experience a much deeper reduction in exports.